Egypt Court Dissolves Parliament, Clears Shafik for Runoff

Ahmed Shafik, a former air force officer widely seen as the army’s preferred candidate, has campaigned on the need to restore law and order. Photographer: Mohammed Abed/AFP/Getty Images

June 14 (Bloomberg) -- Egypt’s highest court ordered that
parliament be dissolved and cleared Ahmed Shafik, a former aide
to ousted President Hosni Mubarak, to run for the presidency in
what one former candidate in the race described as a “coup.”

The twin rulings are a blow to the Muslim Brotherhood, the
biggest party in the Islamist-dominated parliament, and threaten
to inflame tensions two days before its presidential candidate,
Mohamed Mursi, begins a run-off against Shafik, a former air
force general who briefly served as the last premier under
Mubarak.

“Delusional is the one who believes that the millions of
youth will let this pass,” Abdel-Moneim Aboul-Fotouh, a former
Islamist presidential candidate said on his Facebook page,
referring to anti-Shafik protesters. Allowing Shafik to stay in
the race and dissolving parliament, together with yesterday’s
decision giving the ruling military council the authority to
arrest civilians, amounts to a “full coup,” he said.

The court rulings come at critical time -- the country has
no constitution in place, while the military-appointed
government and parliament have repeatedly clashed. Those
conflicts have stymied hopes of concluding a $3.2 billion
International Monetary Fund loan needed to revive an economy
battered in the wake of the January 2011 uprising that pushed
Mubarak from power. The military has previously said it will
hand power to a civilian president by the end of this month.

‘Soft Coup’

“Egypt just witnessed a soft coup,” said Shadi Hamid,
director of research at the Brookings Doha Center, in a phone
interview. “If the parliament is disbanded and the constitution
is put on hold and Ahmed Shafik wins the presidency, then the
transition is effectively over.”

The court, in a ruling issued by its deputy head, Abdel-Wahab Abdel-Razek, in Cairo today, declared unconstitutional a
law that barred some former top Mubarak aides from holding
senior posts. The legislation could have excluded Shafik from
the two-man runoff vote if it had been upheld.

The court also found that part of the law under which the
parliament was elected was illegal, as it allowed parties to
field nominees for seats earmarked for independent candidates.
That ruling is irreversible and means the entire legislature is
illegitimate, court spokesman Maher Sami said. The Brotherhood
formed the assembly’s largest bloc after winning elections that
ended in January. The court said parliament has no "standing
under law."

Emergency Session

The ruling military council, which took power after
Mubarak’s overthrow in February last year went into an emergency
meeting to discuss the court ruling, state-run Nile News said.

With Egypt’s legislature ruled illegitimate, the generals
may take over responsibility for writing a new constitution from
parliament, Al Arabiya television reported, without saying how
it got the information.

Egypt’s 5.75 percent dollar bonds due in April 2020
retreated, pushing the yield up two basis points to 6.7 percent
at 4:15 p.m. in Cairo. The benchmark EGX 30 Index of stocks
declined less than 0.1 percent.

“Egypt’s political crisis has undoubtedly taken a turn for
the worse,” Said Hirsh, a London-based economist at Capital
Economics Ltd., said in response to e-mailed questions. He said
more social unrest and protests are likely, and investors “will
steer clear from Egypt as no clear governance structure or
credible economic plan is likely to emerge soon.”

Restore Security

Shafik, addressing supporters in Cairo after the verdict,
reiterated his pledges to restore security. He said the military
council, the target of protests since it took over from Mubarak,
has protected the country from fragmentation.

Shafik has run as the law-and-order candidate and also
played on fears of a religious takeover among some Egyptians,
promising to keep the state secular.

Ahmed Maher, co-founder of the April 6 youth movement that
was a major force in last year’s uprising, said by phone that
the court’s rulings were a “major provocation” to the
revolution. The dissolution of parliament leaves doubt over
whether the laws it enacted are legitimate, he said. “It’s all
up in the air now.”

Shafik, who finished second behind Mursi in the initial
round of voting last month, had been disqualified from the race
when the law on Mubarak-era officials was passed in late April.
He was reinstated by the election commission when it referred
the law to the constitutional court for a decision.

Hatem Bagato, the commission’s secretary-general, said the
decision to allow Shafik to run “saved the country from a huge
constitutional crisis.” He said the runoff will proceed as
planned.